FDIC Federal Register Citations

[Federal Register: March 6, 1997 (Volume 62, Number 44)]

[Rules and Regulations]

[Page 10199-10201]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr06mr97-4]

=======================================================================

-----------------------------------------------------------------------

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 350

RIN 3064-AB98

Disclosure of Financial and Other Information by FDIC-Insured

State Nonmember Banks

AGENCY: Federal Deposit Insurance Corporation (FDIC or Corporation).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: As part of the FDIC's systematic review of its regulations and

written policies under section 303(a) of the Riegle Community

Development and Regulatory Improvement Act of 1994 (CDRI), the FDIC is

revising its regulation entitled ``Disclosure of Financial and Other

Information by FDIC-Insured State Nonmember Banks'' (the Rule). The

revision removes references to the obsolete savings bank Call Report.

It also permits the annual report required by the Corporation's

regulation on annual independent audits and reporting requirements to

be used as the annual disclosure statement in certain circumstances,

and updates and clarifies certain other references in the Rule.

EFFECTIVE DATE: April 7, 1997.

FOR FURTHER INFORMATION CONTACT: Doris L. Marsh, Examination

Specialist, Division of Supervision, (202) 898-8905; or Sandra

Comenetz, Counsel, Legal Division, (202) 898-3582, FDIC, 550 17th

Street N.W., Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

Background

The FDIC is conducting a systematic review of its regulations and

written policies. Section 303(a) of the CDRI (12 U.S.C. 4803(a))

requires each federal banking agency to streamline and modify its

regulations and written policies in order to improve efficiency, reduce

unnecessary costs, and eliminate unwarranted constraints on credit

availability. Section 303(a) also requires each federal agency to

remove inconsistencies and outmoded and duplicative requirements from

its regulations and written policies. Part 350 contains outdated and

unnecessary language that needs to be revised or removed.

Part 350 was adopted by the FDIC Board of Directors on December 17,

1987, and published on December 31, 1987, 52 FR 49379, effective

February 1, 1988. The Rule requires FDIC-supervised banks and branches

of foreign banks to prepare, and make available on request, annual

disclosure statements consisting of: (1) Required financial data

comparable to specified schedules in Call Reports filed for the

previous two year-ends; (2) information that the FDIC may require of

particular organizations; and (3) other optional information. The

annual disclosure statement must be prepared by March 31 of the

following year, or the fifth day after an organization's annual report

covering the year is sent to shareholders, whichever occurs first. In

place of Call Report data, a bank may use audited financial statements

or reports prepared pursuant to other regulations by the bank or a

parent one-bank holding company.

Discussion

The contents of the annual disclosure statement listed in

Sec. 350.4(a)(1)(iv) and (v) refer in part to schedules in the Call

Report for FDIC-supervised savings banks. The FDIC eliminated the

separate savings bank Call Report in 1989. Therefore, these outdated

references are being deleted.

The FDIC has proposed amending 12 CFR part 335 by incorporating by

reference the rules and regulations promulgated by the Securities and

Exchange Commission under the Securities Exchange Act of 1934 rather

than having its own detailed rules and regulations. (61 FR 33696)

Therefore, Sec. 350.5(a) is revised to refer simply to part 335 rather

than to specific subsections of this regulation.

The Federal Deposit Insurance Corporation Improvement Act of 1991

added section 36 to the Federal Deposit Insurance Act. Section 36 and

its implementing regulation, 12 CFR part 363, require all insured

depository institutions with $500 million or more in total assets at

the beginning of their fiscal year to have an annual audit of their

financial statements performed by an independent public accountant. The

audited financial statements are part of an annual report that

institutions subject to section 36 must prepare and submit to the FDIC.

A new paragraph (d) is added to Sec. 350.5 permitting the use of these

annual reports as annual disclosure statements in certain situations.

In addition, several other wording changes have been made to

improve the clarity of the regulations.

Public Comment Waiver and Effective Date

This regulation is being issued as a final rule. The Administrative

Procedure Act, 5 U.S.C. 551 et seq. (APA) requires that general notice

of a proposed rulemaking be published in the Federal Register. 5 U.S.C.

553(b). However, the revision of part 350 is exempt from the Federal

Register publication requirement pursuant to subsection 553(b)(B). This

section of the APA creates a publication exemption ``when the agency

for good cause finds * * * that notice and public procedure thereon are

impracticable, unnecessary, or contrary to the public interest.'' 5

U.S.C. 553(b)(B). The revisions to part 350 are minor and technical;

therefore the notice and public comment requirements of section 553(b)

are unnecessary. Id. In addition, the APA provides that the required

publication of a substantive rule in the Federal Register shall be made

not less than 30 days before its effective date. 5 U.S.C. 553(d). Part

350 would be exempt from this requirement also for good cause. The

amendments are of such a nature that the public does not need a delayed

period of time to conform or adjust to them. 5 U.S.C. 553(d)(3).

Paperwork Reduction Act

No collection of information pursuant to section 3504(h) of the

Paperwork Reduction Act (44 U.S.C. 3501 et seq.) is required by the

amendments. Therefore, no information has been submitted to the Office

of Management and Budget for review.

[[Page 10200]]

Regulatory Flexibility Act

Because the revisions to part 350 are published in final form

without a notice of proposed rulemaking, no regulatory flexibility

analysis is required.

Small Business Regulatory Enforcement Fairness Act

The Small Business Regulatory Enforcement Fairness Act of 1996

(SBREFA) (Pub. L. 104-121) provides generally for Congressional review

of final agency rules. The reporting requirement is triggered when

agencies issue a final rule as defined by the Administrative Procedure

Act (APA) at 5 U.S.C. 551. Because the FDIC is issuing a final rule as

defined by the APA, the FDIC will file the reports required by SBREFA.

The Office of Management and Budget has determined that the

revision of part 350 does not constitute a ``major rule'' as defined by

SBREFA.

List of Subjects in 12 CFR Part 350

Accounting, Banks, banking, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, the Board of Directors

of the FDIC hereby amends part 350 of chapter III of title 12 of the

Code of Federal Regulations as follows:

PART 350--DISCLOSURE OF FINANCIAL AND OTHER INFORMATION BY FDIC-

INSURED STATE NONMEMBER BANKS

1. The authority citation for part 350 continues to read as

follows:

Authority: 12 U.S.C. 1817(a)(1), 1819 ``Seventh'' and ``Tenth''.

2. Section 350.3 is revised to read as follows:

Sec. 350.3 Requirement for annual disclosure statement.

(a) Contents. Each bank shall prepare as of December 31 and make

available on request an annual disclosure statement. The statement

shall contain information required by Sec. 350.4(a) and (b) and may

include other information that bank management believes appropriate, as

provided in Sec. 350.4(c).

(b) Availability. A bank shall make its annual disclosure statement

available to the public beginning not later than the following March 31

or, if the bank mails an annual report to its shareholders, beginning

not later than five days after the mailing of such reports, whichever

occurs first. A bank shall make a disclosure statement available

continuously until the disclosure statement for the succeeding year

becomes available.

3. Section 350.4 is revised to read as follows:

Sec. 350.4 Contents of annual disclosure statement.

(a) Financial reports. The annual disclosure statement for any year

shall reflect a fair presentation of the bank's financial condition at

the end of that year and the preceding year and, except for state-

licensed branches of foreign banks, the results of operations for each

such year. The annual disclosure statement may, at the option of bank

management, consist of the bank's entire Call Report, or applicable

portions thereof, for the relevant dates and periods. At a minimum, the

statement must contain information comparable to that provided in the

following Call Report schedules:

(1) For insured state-chartered organizations that are not members

of the Federal Reserve System:

(i) Schedule RC (Balance Sheet);

(ii) Schedule RC-N (Past Due and Nonaccrual, Loans, Leases, and

Other Assets--column A covering financial instruments past due 30

through 89 days and still accruing and Memorandum item 1 need not be

included);

(iii) Schedule RI (Income Statement);

(iv) Schedule RI-A (Changes in Equity Capital); and

(v) Schedule RI-B, Part II (Changes in Allowance for Loan and Lease

Losses).

(2) For insured state-licensed branches of foreign banks:

(i) Schedule RAL (Assets and Liabilities);

(ii) Schedule E (Deposit Liabilities and Credit Balances); and

(iii) Schedule P (Other Borrowed Money).

(b) Other required information. The annual disclosure statement

shall include such other information as the FDIC may require of a

particular bank. This could include disclosure of enforcement actions

where the FDIC deems it in the public interest to do so.

(c) Optional information. A bank may, at its option, provide

additional information that bank management considers important to an

evaluation of the overall condition of the bank. This information could

include, but is not limited to, a discussion of the financial data;

information relating to mergers and acquisitions; the existence of and

facts relating to regulatory enforcement actions; business plans; and

material changes in balance sheet and income statement items.

(d) Disclaimer. The following legend shall be included in every

annual disclosure statement to advise the public that the FDIC has not

reviewed the information contained therein: ``This statement has not

been reviewed, or confirmed for accuracy or relevance, by the Federal

Deposit Insurance Corporation.''

4. Section 350.5 is revised to read as follows:

Sec. 350.5 Alternative annual disclosure statements.

The requirements of Sec. 350.4(a) may be satisfied:

(a) In the case of a bank having a class of securities registered

pursuant to section 12 of the Securities Exchange Act of 1934, by the

bank's annual report to security holders for meetings at which

directors are to be elected or the bank's annual report (see 12 CFR

part 335);

(b) In the case of a bank with independently audited financial

statements, by copies of the audited financial statements and the

certificate or report of the independent accountant to the extent that

such statements contain information comparable to that specified in

Sec. 350.4(a); and

(c) In the case of a bank subsidiary of a one-bank holding company,

by an annual report of the one-bank holding company prepared in

conformity with the regulations of the Securities and Exchange

Commission or by sections in the holding company's consolidated

financial statements on Form FR Y-9C pursuant to Regulation Y of the

Federal Reserve Board (12 CFR part 225) that are comparable to the Call

Report schedules enumerated in Sec. 350.4(a)(1), provided that in

either case not less than 95 percent of the holding company's

consolidated total assets and total liabilities are assets and

liabilities of the bank and the bank's consolidated subsidiaries.

(d) In the case of a bank covered by 12 CFR part 363, by an annual

report prepared pursuant to 12 CFR 363.4. However, if the annual report

is for a bank subsidiary of a holding company which provides only the

consolidated financial statements of the holding company, this annual

report may be used to satisfy the requirements of this part only if it

is the report of a one-bank holding company and provided that not less

than 95 percent of the holding company's consolidated total assets and

total liabilities are assets and liabilities of the bank and the bank's

consolidated subsidiaries.

5. Section 350.6 is revised to read as follows:

Sec. 350.6 Signature and attestation.

An authorized officer of the bank shall sign the annual disclosure

statement. The officer shall also attest to

[[Page 10201]]

the correctness of the information contained in the statement if the

financial reports are not accompanied by a certificate or report of an

independent accountant.

6. Section 350.12 is revised to read as follows:

Sec. 350.12 Disclosure required by applicable banking or securities

law or regulations.

The requirements of this part are not intended to replace or waive

any disclosure required to be made under applicable banking or

securities law or regulations.

By order of the Board of Directors.

Dated at Washington, D. C. this 4th day of February, 1997.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Deputy Executive Secretary.

[FR Doc. 97-5510 Filed 3-5-97; 8:45 am]

BILLING CODE 6714-01-P